India expected to be world's fastest growing economy, says new UN report
K. R. SRIVATS BUSINESS LINE NEW DELHI, JAN 22:
India will be the fastest growing major economy in the world in 2016, says the United Nations World Economic Situation and Prospects 2016 report launched today.
This report expects the Indian economy, which accounts for over 70 per cent of South Asia's GDP, to grow 7.3 per cent in 2016 and 7.5 per cent in 2017, up from an estimated 7.2 per cent in 2015.
South Asia is expected to be the world's fastest growing region in 2016 and 2017 despite challenging global conditions, the report added.
On India, the UN report noted that the macroeconomic environment has improved, helped by the sharp decline in the prices of oil, metals and food.
Consumer and investor confidence has risen even as India’s Government faced difficulties in implementing its wide-ranging reform agenda and some economic indicators, such as industrial production, remain volatile, the report added.
Asked what explained the optimism over India’s GDP seeing incremental growth improvement in coming years, Nagesh Kumar, Economist and Head,UN-ESCAP South and South West Asia Office, said that many of the reforms that are stalled now are expected to get on track.
Moreover, the softening of global oil prices, which is the only silver lining for India, is expected to continue, especially after Iran coming on board.
“Oil prices are not going to go up in near future or medium term. With Iran coming on board, oil prices is only bound to go down and not up”, Kumar said after releasing the WESP report in the capital.
A recent ESCAP report had projected India’s GDP growth at 7.4 per cent for 2015-16 and 7.5 per cent for 2016-17.
Meanwhile, Kumar also said that this was good time for India to increase it’s spend on social sector and employment creation activities, even if it meant deviating from fiscal consolidation goals for say a year..
“If the fiscal stimulus is used for spending on social sector, the rewards will be many. Besides accelerating recovery, it will make growth inclusive.
I would for the current year (2016-17) not focus on fiscal consolidation too much. The caveat is spending should be more on social and employment creating sectors. That will be very rewarding”, he added.